Tag Archives: BRICs

Posted onApril 10, 2013|Comments Off on A Diplomatic Way Of Saying A BRICS Development Bank Is A Stupid Idea

Dani Rodrik has this in Project Syndicate today:

It can be cause only for celebration that the world’s largest developing economies are regularly talking to each other and establishing common initiatives. Nonetheless, it is disappointing that they have chosen to focus on infrastructure finance as their first major area of collaboration.

This approach represents a 1950’s view of economic development, which has long been superseded by a more variegated perspective that recognizes a multiplicity of constraints – everything from poor governance to market failures – of varying importance in different countries. One might even say that today’s global economy suffers from too much, rather than too little, cross-border finance.

What the world needs from the BRICS is not another development bank, but greater leadership on today’s great global issues. The BRICS countries are home to around half of the world’s population and the bulk of unexploited economic potential. If the international community fails to confront its most serious challenges – from the need for a sound global economic architecture to addressing climate change – they are the ones that will pay the highest price.

Yet these countries have so far played a rather unimaginative and timid role in international forums such as the G-20 or the World Trade Organization. When they have asserted themselves, it has been largely in pursuit of narrow national interests. Do they really have nothing new to offer?

Sometimes news editors exercise such brain-dead judgment that it’s a wonder journalism as a practice even survives.

That sentence was one of a few I conjured up as a possible lead-off thought. Well, technically, it was the only sentence, since the rest are thoughts posed as questions. Here they are:

Is the BRICS Durban conference officially the acronym’s 14th minute of fame?

When will the country grouping of France, Uganda, Chad, Kenya, Oman, Fiji and Finland finally supplant the BRICS as the political economy cadre du jour? What about Bulgaria, Uganda, Lithuania, Latvia, Spain, Haiti, Italy and Thailand?

Does anyone honestly still believe in the BRICS as an investment theme?

Am I the only one seeing that Brazil, Russia, India, China and South Africa may actually have less in common than a brain, an athlete, a basket case, a princess and a criminal?

What drives this apparently human need to shrink everything down into bite-sized archetypal infonuggets?

Whenever I see Mark Mobius interviewed, in print or television, the reporter is invariably throwing softballs at him and just can’t stop gushing about what a maverick swami master sensei the man is to so many inspired investors the world over from his perch out there in the wilds of Asia. And Mobius never fails to grab the mic and basically sing his book. Mind you, I have absolutely nothing against Mark Mobius–if I were in his shoes, I’d probably play it the same way.

And so it is in a recent interview with Forbes, in which the most interesting part is his discussion of where he’s long and how he’s allocated. But before we look at that, let’s first look at this:

Can you feel the excitement? Don’t kid yourself, this has World Cup Fever written all over it–BTG Pactual is going for the gold. Here’s an exercise: drop “André Esteves” with the word, “star” into Google and see what comes up. I’m serious. Or you can just take my word for it. Reuters refers to him as a “wunderkind” while Forbes prefers “swashbuckling”. I don’t doubt the man’s savvy, but really, media people, get a grip. And you wonder why the public holds you in such low esteem?

Anyway, this analysis compares it to Goldman Sachs’ IPO, which is a comparison I would court if I were Esteves, but I’m not sure how instructive that is for the rest of us. My knee-jerk reaction was how it will compare with the IPOs of some of the Chinese banks a few years back, but let me think about this some more. The more relevant point, as mentioned in the wunderkind article, might be about return on equity. In the meantime, seriously: World Cup Fever.